Many business owners think the MCA lawsuit process ends when they file an answer. However, what happens after that is critical to the outcome of your case. Below we explain what typically happens in New York, where most cases are brought based on the choice of law/venue in the merchant agreement, with Pennsylvania differences noted.
What does the MCA funder file?
In general, the MCA funder will file a complaint alleging both breach of the merchant agreement and breach of the owner's personal guaranty. See, e.g., Apollo Funding v. Dave Reilly Construction (Rockland County Supreme Court Oct. 2023). Since 2019, a confession of judgment can only be filed in the county of the defendant's residence pursuant to CPLR 3218(b), so many MCA funders now file lawsuits against out-of-state merchants instead. See How fast can an MCA funder get a judgment against me? for a speed comparison.
How long do I have to respond to the lawsuit?
Once you've been properly served, you have 20 days to respond if served personally within New York, or 30 days for most other methods of service, pursuant to CPLR 320(a). In Pennsylvania, you have 20 days pursuant to Rule 1026(a), and in federal court 21. The business must appear through an attorney, pursuant to CPLR 321(a). For how to respond, see My MCA funder is suing me. What do I do?
What happens after you file an answer to the lawsuit?
Your response is either an answer, which should include any available defenses (criminal usury, payment, arbitration, etc.) because allegations you don't deny are deemed admitted pursuant to CPLR 3018, or a pre-answer motion to dismiss. If you file a motion to dismiss, you have 10 days after the decision to answer, pursuant to CPLR 3211(f).
Next, someone typically files a Request for Judicial Intervention ("RJI"), which assigns a judge to the case. The court will then serve the parties with a Preliminary Conference Stipulation, and if all parties sign it within 30 days, no Preliminary Conference will be held. Under 22 NYCRR 202.12, the rest of the case runs 12 months from the RJI for a standard case and 15 months for a complex case.
What is discovery in an MCA lawsuit?
Discovery is the process by which either side can compel the other to produce documents and testimony. New York allows "full disclosure of all matter material and necessary" to the prosecution or defense of the case under CPLR 3101(a). In an MCA lawsuit, the business owner should seek:
- the MCA funder's reconciliation requests, if any, and how it responded to them;
- the logs of ACH debits taken by the MCA funder; and
- the underwriting file (how your estimated receivables were calculated, broker messages, etc.).
Reconciliation is especially important, as courts looking at whether an MCA is a loan focus on whether reconciliation is mandatory. In Kapitus Servicing v. Suburban Waste (N.Y. App. Div. Feb. 2026), the court found that, because "it is not clear whether reconciliation is mandatory or exercisable at plaintiff's discretion," summary judgment for the MCA funder was not appropriate.
Why do MCA funders file for summary judgment so quickly?
MCA funders often file for summary judgment soon after the answer is filed, as the contract, payments and an affidavit of nonpayment are the bulk of what they need. Any party can file once issue is joined pursuant to CPLR 3212(a), but the motion must be filed within 120 days of the note of issue, unless an extension is granted. If you need more time for discovery, you can apply to postpone the motion under CPLR 3212(f).
In Apollo, the funder had paid $25,000 for $37,750 in receivables, and the merchant had already paid $14,240 before defaulting. On April 22, 2024, approximately six months after filing, the trial court denied summary judgment. On September 24, 2025, approximately 23 months after filing, the Second Department reversed and granted summary judgment.
Will an MCA lawsuit actually go to trial?
Few MCA lawsuits go to trial, though I cannot find an official percentage. In New York, a note of issue must be filed pursuant to CPLR 3402. That note is where you demand a jury; otherwise all parties are deemed to have waived one under CPLR 4102. In Pennsylvania, cases below a county-set amount go to "compulsory arbitration," and whoever loses can obtain a new trial by appealing within 30 days (Pa.R.C.P. 1308).
Key Time Periods in the MCA Lawsuit Process
| Action | New York | Pennsylvania |
|---|
| File an answer | 20 or 30 days after service (CPLR 320(a)) | 20 days after service (Pa.R.C.P. 1026(a)) |
| Answer after a motion to dismiss | 10 days after notice of the order (CPLR 3211(f)) | File preliminary objections (Pa.R.C.P. 1028(a)) |
| Motion for summary judgment | Within 120 days after the note of issue (CPLR 3212(a)) | After pleadings close, without delaying trial (Pa.R.C.P. 1035.2) |
| File an appeal | 30 days (CPLR 5513(a)) | 30 days after the arbitration award is docketed (Pa.R.C.P. 1308) |
Can I settle after the MCA lawsuit has been filed?
You can settle at any stage, but review the settlement documents carefully. Under New York law, a settlement is not binding unless it is in writing and signed by the parties or made part of a court order (CPLR 2104). Watch for stipulations that let the funder enter judgment without notice or further application to the court if you miss a payment; in Diesel Funding v. Build Retail (April 2026), that clause produced a $1,476,330.68 judgment.
Frequently Asked Questions
If I don't file an answer, will the funder automatically win the case?
No. In New York, the funder must apply for a default judgment pursuant to CPLR 3215, and if it does not apply within one year after the default, the court must dismiss the complaint as abandoned. In Pennsylvania, the funder must first send a notice of intention giving you 10 days to respond pursuant to Pa.R.C.P. 237.1, and then apply to the prothonotary for entry of default.
If I lose the MCA lawsuit, can I appeal?
Yes. In New York, you generally have 30 days from service of the judgment or order with notice of entry to file a notice of appeal (CPLR 5513(a)). In Pennsylvania compulsory arbitration, you have 30 days from the docket notation of the award to appeal for a new trial, paying the arbitrators' compensation up to 50% of the amount in controversy.
What are the damages if I lose the MCA lawsuit?
In New York, prejudgment interest is assessed at 9% per annum on commercial contract claims (CPLR 5001 & 5004). So if you are sued for $50,000 and the case takes two years, you will owe approximately $9,000 in interest, before the funder's contractual fees.